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Advice on Credit Card Payment Arrangement When in Hardship

I am having a tough time with my credit card payments since I had an accident. Any tips on negotiating a payment arrangement?

I recently had a severe car accident, was in the hospital for two months and consequently fell behind on my credit card payments. I am concerned with my AMEX as I am now 80 days past due. I spoke to them this morning and they advised me that being that I am an outstanding customer who's always made payments on time and have an R1 credit score, they could work with me to help me lower my payments. My total cc balance is $18,939.92 currently at 26% (as I was over the credit limit). I am passed due $1306 which I cannot afford to pay right now. AMEX offered to give me a rate of 9.9% paying $550/month x one year. They advised they would waive my interest rate and late fee which they said comes up to $78/month savings. They also advised if I pay the $1306 upfront that's passed due which brings the account current, AMEX customer service dept would be able to negotiate a better rate & monthly payment arrangement but they don't know what that would be. Bill, what is your suggestion?

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Bill's Answer
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Looks like Amex is offering you a break with your payments and interest rates, although I would ask for the same in writing (always do this when dealing with big credit card companies as they are known to promise a lot and then go back on their words). I would not hope for much after the point that you make the $1306 payment to bring the account to a current status, as it does not give them an incentive to offer a rate reduction.

This is what I suggest. If your financial crunch is only temporary, then by all means take the offer, which should give you the leeway you need to get back on track. But, if you foresee more problems in the future, then I would start to explore other options for debt relief. Since debt relief comes in many forms, it is important that each consumer reflects on what their needs and concerns and financial situation is before signing up for an online debt consolidation program. If you would like a free consultation with one of's approved debt counselors just fill out the short form here: Debt Relief Savings Quote

The four primary concerns for most consumers are:

1) monthly payment,

2) time to debt freedom,

3) total cost, and

4) the credit rating impact of the consolidation program.

Be sure to evaluate each program, relative to your prioritization of these factors. Since there are a variety of online debt consolidation options, including credit counseling, debt negotiation/debt settlement, a debt consolidation loan, and other debt resolution options, it is important to fully understand each option and then pick the solution that is right for you.

Credit Counseling

- Credit counseling, or signing up for a debt management plan, is a very common form of online debt consolidation. There are many companies offering online credit counseling, which is essentially a way to make one payment directly to the credit counseling agency, which then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. It is important to understand that in a credit counseling program, you are still repaying 100% of your debts – but with lower monthly payments. On average, most online credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan DOES show up on your credit report… and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 Bankruptcy – or using a third party to re-organize your debts.

Debt Settlement

- Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money.

Debt Consolidation Loan

- Many people think first of a debt consolidation loan when seeking online debt consolidation. This option typically means a second home loan (or home equity line of credit) or refinancing your primary mortgage. In a debt consolidation loan, you exchange one loan for another. The most frequent form is taking out a mortgage loan, which carries a lower interest rate and is tax deductible, to pay off high interest rate credit card debt. It is important to be aware that shifting unsecured debt to secured debt can create a volatile situation, if there is ever a chance that you cannot afford the new mortgage payment you are now putting yourself at risk of foreclosure! In the case of a debt consolidation loan, most mortgages are 30 year loan, which means that the total cost and the time to debt freedom could be very high… but the monthly payment will be lower than other options and there is no credit rating impact.


: while there are many forms of online debt consolidation, many people with good to perfect credit who own homes should look into debt consolidation loans, while consumers with high credit card debt and poor credit may want to explore debt settlement or debt negotiation. However, each consumer is different, so find the online debt consolidation option that fits for you.

I hope the information provided helps you Find. Learn. Save.



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